All Forum Posts by: Paul Gold

Nexus Direct IRA is worth checking out, too. I've been investigating the same matter and have been the most impressed by them so far (spoke to Todd Grill, the owner). I haven't talked to either QuestIRA or uDirect but will do so now. Thanks!

Thanks, guys. Not what I was hoping to hear, but no surprise. As stated in the original post, this is a blatant attempt to take gains into our Roths. We are new to the sdIRA world and were hoping to hear from some experienced investors. Coming in blind it is hard to determine how lenient the IRS is with sdIRAs.

@Ned Carey Yesterday I spoke to an additional custodian who also raised the quid pro quo issue. His take was that the IRS goofed by not including siblings as disqualified parties and uses QPQuo to make up for that error. Certainly seems logical. Thank you!

@Chris Weiler The IRS is clear that an IRA holder cannot deal with themselves, but they do permit one to deal with their siblings.

@ Steven Hamilton II Gray area exactly! Guess the question is would we want to expose ourselves to the possibility of being the guinea pigs who get this area defined… I think not. Thank you!

Hi Jerry,

Thanks for the reply. Respectfully, I do not believe that is correct. The IRS is very specific as to which family members are a Disqualified Person. Ancestors and lineal descendants and their spouses are prohibited. No spouses, grandparents, parents, kids, grandkids, or their spouses.

Each custodian and attorney (with an sdIRA specialty) I've spoke to has stated that brothers, uncles, cousins, etc are permitted parties with whom to deal. One of the attorneys did not like the specific ideas described above because he thought it may cause future IRS tax/legal problems. Two other attorneys and every custodian blessed the idea. The attorney who balked did not like the idea irrespective of that fact that it involved a brother. So I do not know how to proceed…

From the IRS website; emphasis added:

Prohibited Transactions in an IRA

Generally, a prohibited transaction is any improper use of an IRA account or annuity by the IRA owner, his or her beneficiary or any disqualified person.

Disqualified persons include the IRA owner's fiduciary and members of his or her family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Prohibited-Transactions

Hi all, hope you are well this evening. Considering the following scenarios and would like opinions about whether the IRS would consider them allowable transactions, please.

My brother and I each have our own portfolio of IL tax lien certificates, completely independent of each other. There is absolutely no common ownership. The tax liens are purchased directly from the County. If it does not redeem, we file a petition in court a couple years later asking the judge to issue a tax deed. At the time of the auction one can not know which certificates will become deeds. There is a decent profit potential for those that do become deeds.

What we would like to do is to have my sdRothIRA purchase some of those older liens that are about to become deeds from my brother's portfolio. His sdRothIRA would do the same from my portfolio. Essentially only cherry-picking the good stuff. The sdRothIRAs would quickly flip the properties. The gain would be taken into the Roth, tax free. Interested on thoughts on whether this would be an allowable transaction? Thanks!

A variation we discussed is to individually go to deed personally, then have the sdRothIRA buy an option to purchase (the price being some figure slightly above the after-rehab hard dollar cost) on or before some specified future date. Then we would find an arms length buyer and have two closing on the same day. The sdRothIRA buying from the brother, and that sdRothIRA selling to the new buyer. Again, the gain would be taken in the sdRothIRA, tax free.

These are pretty blatant moves to take the gains into the sdRothIRA, yet they seem to conform to the rules of the game. Are we missing something? Thank you!!